"We hope to soon bring to market a fuel cell that will provide homeowners with an efficient, reliable and environmentally benign source of electricity and heat," said Lee Stewart, president of SoCalGas' Energy Transportation Services.

Fuel cells use hydrogen-based fuels, like natural gas, to generate power electrochemically without combustion, producing only heat and water as byproducts.

The systems recycle heat, which is often treated as a waste product in traditional power plants, to provide heating and hot water for the home.

Fuel cell technology, first developed by the space programme, has only recently become commercially feasible due to advances in materials and design.

Other investors in Plug Power include DTE Energy Co. , the parent of Detroit Edison, Michigan's largest electric utility; Mechanical Technology Inc., an early developer of fuel cell technologies, and General Electric Co. .

Since last June, Plug Power has operated the world's first fuel cell-powered home with a system designed to provide the average-sized house with its total electricity needs, according to SoCalGas.

Initial market launch of the 7-kilowatt system is planned for 2001, with distribution planned in the U.S. and overseas with General Electric, through GE Fuel Cell Systems.